Health insurers are in business to make money, and one way they can increase profits is denying claims. And they do. A lot.

About 200 million health insurance claims are denied annually, according to the AARP. While that might be great for insurers’ shareholders, it sucks for patients.

The good news is, when a consumer appeals their insurance company’s decision, the denial is reversed about half the time. It’s worth it to appeal a denial, but it’s not typically easy. Here’s what you can do to fight back against a denied health insurance claim.

1. Find out why it was denied

Obvious? Yes. Simple? Probably not.

“Make sure you understand why the claim was denied,” says Carrie McLean, director of customer care at eHealthInsurance.com. “This may be shown on the explanation of benefits, which is typically provided to you after a claim is submitted by the doctor to your insurance company.”

If it’s not, call your insurance company. Denials usually fall under the following categories, McLean says.

The service is excluded: “Services itemized on a plan’s list of ‘exclusions’ are almost never covered,” McLean says. “This is why you should always familiarize yourself with your health plan’s exclusions before enrolling in coverage.”

The service is not a clear medical necessity: Sometimes, medical services are denied coverage when:

They appear to be purely cosmetic

They require preauthorization

Prior course of treatment is required (“For example, some prescription drugs may only be covered after you’ve first tried less costly alternatives,” McLean says.)

Then again, it could also just be a paperwork error. But even if the denial is as simple as a coding mistake, your work isn’t done.

“If it’s an error by the doctor’s office, where they put down the wrong code, you’re responsible for finding the right code,” says Adria Goldman Gross of MedWise Insurance Advocacy. ”Many times the insurance company won’t even tell you what the right code is.”

In that case, you may have to work with your doctor’s office or hospital to find the correct code, and then call your insurance company again.

2. Apply for a formal appeal

Applying for a formal appeal might seem complicated, but it usually follows a predictable pattern.

“Although appeal letters vary in style, the format of your letter should include the following: First, simply state that you are appealing the decision. Next, explain why you disagree with the decision. Finally, provide as much additional supporting evidence as you can gather for your claim. Usually, you will have to rely on your doctors for this information, but it doesn’t hurt to do some of your own research,” says Rachel Teicher, marketing coordinator of Kantor & Kantor, LLP, a law firm that specializes in health insurance denials.

Teicher also recommends asking for a copy of your policy and claim file from your insurance company. A claim file consists of your medical records, internal notes and memos physician reviews, and any other information that was used in the decision to deny your claim.

“When communicating with your insurance company, remember that all communication should be in writing,” Teicher says. “All correspondence should be sent through certified mail, return receipt requested. Email works also, but insurance representatives will rarely give you an email address. If you can’t prove that a conversation with your insurance company happened, it doesn’t exist.”

While there are plenty of nightmarish stories in navigating the healthcare system, “the appeals process really can work,” McLean says. “Don’t assume that your claim will be automatically denied.”

If your appeal doesn’t take the first time, it’s a good idea to reapply. Each time you reapply, your odds of success improve because of the way the many companies’ software systems are designed, says Gross.

“But a lot of the insurance companies will continue to appeal you no matter what you write. When you go to the state, you have a better chance,” Gross says.

3. Contact your state’s insurance regulator

Each state has a department that regulates insurance, and that might be one avenue for frustrated policyholders to get their issues resolved, says Gross.

Be aware that before the state gets involved, they may first want you to appeal as many times as you can with your insurance company.

4. Get help

If all this sounds horrible, that’s because it is. The appeal process is complicated and time consuming, which is why individuals turn to Gross’ services in the first place.

If your situation is especially bleak, Gross says it might help to find people willing to hear your cause and get behind it.

Patient advocates might be willing to hear your story and get behind your cause, too. They might help you write a more effective claim letter or help you navigate the entire process.

During the appeals process, it may help to talk to your doctor, McLean says.

“Your doctor can be a powerful advocate during an appeal, especially if they have insight into your health and documentation of your condition which the insurance company doesn’t possess,” McLean says. “He or she can help you with your appeal by providing clinical notes or copies of pathology reports that support your case. Sometimes your doctor will write an appeal letter on your behalf.”

Hiring a lawyer to represent you is another option if the claim is large enough to justify the expense.

“You may want to consider getting representation from a reputable attorney,” Teicher says.

5. Consider arbitration

Your policy may offer the option of arbitration. But keep in mind, if you decide to arbitrate, it usually means the decision is a done deal.

“Arbitration, a negotiation that takes place outside of court, must be something offered under the terms of your policy,” Teicher says. “Most often, the arbitration is ‘binding’ meaning it is final and cannot be appealed absent very special circumstances.”

Avoid a denied health insurance claim in the first place

You can avoid insurance nightmares altogether by familiarizing yourself with your policy and pre-authorizing any coverage for a medical service you might be concerned about.

“If you’re not certain that a particular service will be covered, ask your insurance company about it,” McLean says. “They will tell you if preauthorization is recommended or required.”

What do you think? Have you ever had an issue with a health insurer? How did it get resolved?

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8 Responses to “5 steps to punch a denied health insurance claim in the face”

I would also point out the possibility that insurers sometimes deliberately deny valid claims as a way to make money. What suggestions might the author have for addressing fraudulent denials? This is a bigger issue than an individual’s response to a denied claim. Legislation and/or better oversight may be needed.

If your insurance is employer-provided, you should also approach your HR department for help. You would do this because you don’t have control over the selection process, but they do! I’ve used this approach time and again to solve occasional issues I’ve had and it works like a charm.

This post is very valuable as a good starting point for those “in denial” as it were. Thanks for writing it.
Many folks have been against a single payer system for healthcare in the U.S. but insurance companies denying claims or reducing payouts is very common. Ever come out in good shape after a car accident?
Insurers know how to cut your benefit just enough to keep you from suing. They make billions doing just that.

@Katherine: I agree, that’s a more complicated situation that goes beyond the topic of this post, and I wish I could be of more help. But for an individual going through something like this, they might turn to the help of an advocacy group or involve a lawyer. But you’re right, that’s a short-term solution to a larger problem.

NAIRO (a trade group for Independent Review Organizations) is a good resource to consult when in question too. Patients have a lot of rights, and until I started working in the medical review industry, had no idea the extent. Thanks for bringing this topic up.

May I suggest a couple of additional things to do in point 1? Call the Provider of the Services, especially if it is your Dr., they may have ideas as to why it was denied. It could be as simple as the wrong coding for the visit, procedure/s or whatnot. They make the corrections and rebill. Have done this several times. Also calling the Insurer can give clues as to why something was denied. That can be helpful if one has to go the appeal route.

Which I had to do once. The Health Insurance was provided by a Union Trust, who in turn hired a TPA [Third Party Administrator] to handle all the Health and Welfare issues for the Trust and they in turn had the claims processed by an Insurance Company, like Blue Cross. But the buck stopped with the Union. All the steps you list I followed.

My father had a health insurance claim denied, even after he refiled 2-3 more times. Turned out that his auto insurance was responsible for coverage since he was injured while doing maintenance on his vehicle. He never would have thought to file with his auto insurance until a friend who sells auto insurance made the suggestion. So, be sure you are filing with the correct insurer. It makes no sense why his health insurance provider didn’t make this clear. Their only response was “denied.”

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